The Lomas case deals with unusual facts, where the administration of Lehman Brothers resulted in a substantial surplus and interest of some £5bn was payable to creditors. If this was yearly interest, tax at 20% would have to be deducted at source. The Court of Appeal allowed HMRC’s appeal and agreed that withholding tax should be deducted under ITA 2007 s 874. The case includes some interesting historical background, as well as a summary of the key principles for determining whether interest is ‘short’ or ‘yearly’. These principles are of wider application, particularly in the case of intra-group loans from a foreign parent to a UK subsidiary company.